Value Investing Basics
Most investors regard value investing as purchasing cheap or discounted stocks. However, this investing strategy is more than this.
Value investing refers to the purchase of stocks that have been overlooked by the market and as a result their price is below their real value. This means that the real value of a stock is not correctly reflected by the price at which it is traded.
If you are a value investor you should pay special attention to the business fundamentals. The latter should be on the top of your list of criteria and priorities. Only after this should the other influences be considered.
Business fundamentals that you should study include:
•Earnings growth
•Cash flow
•Dividends
•Book value
These should be of higher importance than the rest of the market conditions that may influence the price of the stock you have selected.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Sunday 15 November 2009
Stock Price Influences
Stock Price Influences
Stock prices are vulnerable to many market changes. However, there are three major influences that have an effect on the ups and downs of the prices. You should become familiar with these influences in order to be able to identify whether the change in the price gives you a signal to sell, buy or do nothing with a particular stock.
Business Fundamentals Change
The first influence is a change in the economic conditions in the market. If a particular company experiences a steady increase in its revenue and profits, then it represents an attractive investment to investors. As a result, you can expect that the price of the stock will increase as investors bid for its purchase.
The opposite is true if the particular company experiences a flat trend of its revenue and profits or even there is a decline it them. As a result, investors will show no interest in the stock and the price of the latter will fall.
If a company incurs debt or executes an acquisition its price will be again influenced. However, the effect of these will not be felt immediately.
The important thing to remember is that a change in the business leads to a change in the price of its stock. So, you should learn to notice the underlying business changes before they are reflected in the price of the stock.
Sector Change
Every company is part of a particular sector. Some sectors are influenced by different cycles, which in turn are reflected in the price. Therefore, being a smart investor requires you to be able to spot the cyclical changes that may influence the price of the stock.
The bad news is that if the whole sector experiences a major change, all companies are influenced no matter of their business fundamentals.
This means that no matter how well your stock may perform, if the whole sector sinks your stock will sink too. On the other hand, if you hold a badly performing stock, but the prices of the stocks are artificially inflated, the price of your stock will also increase.
Market Cycle Change
Generally, the market experiences different cycles. It goes up and down or stays flat.
As a result your stock will be influenced by these movements. It may move in accordance with the market or go against it. The latter is especially true about smaller companies, which often times don't follow the market trends. However, large-cap stocks generally move in accordance with the market up to a certain point and then get their own direction.
Stock Influences Application
By studying the changes in the business fundamentals you may get an idea on whether to purchase stocks of a growing company or sell such if the company is getting in a worse position.
Sector changes are most of the time a temporary events. Nevertheless, a major change may require you to reexamine the viability of your stocks. The time may have come to say goodbye to your stocks. You should make a careful analysis on the ability of the company to adapt to the changes that have occurred.
Changes in the market cycles may be beneficial to investors, because they may provide you with the opportunity to add new stocks to your holdings. Additionally, if the price is high enough being pushed by the market cycle, it may be time to sell it and use the proceeds to purchase additional stocks when the price is down again.
http://www.stock-market-investors.com/stock-investing-basics/stock-price-influences.html
Stock prices are vulnerable to many market changes. However, there are three major influences that have an effect on the ups and downs of the prices. You should become familiar with these influences in order to be able to identify whether the change in the price gives you a signal to sell, buy or do nothing with a particular stock.
Business Fundamentals Change
The first influence is a change in the economic conditions in the market. If a particular company experiences a steady increase in its revenue and profits, then it represents an attractive investment to investors. As a result, you can expect that the price of the stock will increase as investors bid for its purchase.
The opposite is true if the particular company experiences a flat trend of its revenue and profits or even there is a decline it them. As a result, investors will show no interest in the stock and the price of the latter will fall.
If a company incurs debt or executes an acquisition its price will be again influenced. However, the effect of these will not be felt immediately.
The important thing to remember is that a change in the business leads to a change in the price of its stock. So, you should learn to notice the underlying business changes before they are reflected in the price of the stock.
Sector Change
Every company is part of a particular sector. Some sectors are influenced by different cycles, which in turn are reflected in the price. Therefore, being a smart investor requires you to be able to spot the cyclical changes that may influence the price of the stock.
The bad news is that if the whole sector experiences a major change, all companies are influenced no matter of their business fundamentals.
This means that no matter how well your stock may perform, if the whole sector sinks your stock will sink too. On the other hand, if you hold a badly performing stock, but the prices of the stocks are artificially inflated, the price of your stock will also increase.
Market Cycle Change
Generally, the market experiences different cycles. It goes up and down or stays flat.
As a result your stock will be influenced by these movements. It may move in accordance with the market or go against it. The latter is especially true about smaller companies, which often times don't follow the market trends. However, large-cap stocks generally move in accordance with the market up to a certain point and then get their own direction.
Stock Influences Application
By studying the changes in the business fundamentals you may get an idea on whether to purchase stocks of a growing company or sell such if the company is getting in a worse position.
Sector changes are most of the time a temporary events. Nevertheless, a major change may require you to reexamine the viability of your stocks. The time may have come to say goodbye to your stocks. You should make a careful analysis on the ability of the company to adapt to the changes that have occurred.
Changes in the market cycles may be beneficial to investors, because they may provide you with the opportunity to add new stocks to your holdings. Additionally, if the price is high enough being pushed by the market cycle, it may be time to sell it and use the proceeds to purchase additional stocks when the price is down again.
http://www.stock-market-investors.com/stock-investing-basics/stock-price-influences.html
Has the Time for Selling Stocks Come?
Has the Time for Selling Stocks Come?
When your stock turns into a winning player you may become frustrated about whether it is time to sell it. Many financial advisors recommend the avoidance of selling a winning stock, whereas other specialists claim that selling is an inseparable part of the trading process.
Consider the following case. You have purchased a stock that has become winning. One of the alternative courses of action that you can undertake is to sell the stock and enjoy its profits. On the other hand, you can keep the stock and wait to see its future development.
However, you should consider the following steps regarding the second option. They are required in order not to lose the profits you have acquired.
1.Examine Company's Fundamentals
The first thing you should examine is the fundamentals of the company that has issued the stock. This is required in order to see whether the company has stable fundamentals. Failure in the latter may lead to a fall in the price of your winning stock.
Make a careful examination on such things as cash flow, debt, sales and etc. If there is a problem don't wait for the market to notice these problems and quickly sell the stock before the price has fallen and you have lost your profits.
2.Set a Target Price
When you purchase a stock it is a good idea to set a target price, which if reached triggers the selling of the stock. The target price of the stock may be both above and below the current level. This means that if the stock increases or decreases to a certain level you should sell it.
The setting of an upper limit is many times required for the purpose of insuring yourself against the potential inability of the stock to sustain a market price that is above a certain level. A bad event may trigger the fall in the price and as a result you may lose your profits.
Additionally, many investors know how much they want to get from a stock and establish the upper level. Once reached, they dump the stock.
3.Watch for Events Suggesting It Is Time for Selling
Many events can have a negative effect on the value of your winning stock. Thus, you should carefully consider them and whenever they occur you should embark on selling. Such events may include:
◦Too much attention from the media
Too much attention on the part of the media may lead to artificially inflated prices of the stock since many investors show interest. After the hype passes the price may start to fall and result in the loss of profits.
◦Slowed growth of the stock.
If you possess a growth stock, it is good to consider its selling after it has reached the point at which its growth speed has started to decrease. This is required because the market shows negative attitude toward growth stocks that are unable to sustain their growth.
◦Better investment opportunities
It may turn out that there are other stocks that provide better returns. The latter may present a lower level of risk as well. Thus, it is recommended that you consider the selling of your stock and purchasing one of these.
◦Decreased or Eliminated Dividends
At one point or another, the company issuing the stock may start to decrease the dividends it pays to shareholders. If they are also completely eliminated, then this may indicate that the company is undergoing some change or problem. This represents a good reason for selling the stock and avoiding losing your profits.
Many financial experts advise the selling of part of the stock. The rest is left to grow further. In this way you get part of your profits and let the rest generate further returns.
Finally, don't be too hasty and make frequent trades just because you have obtained some profits from a stock. The commission fees that you will have to pay for the frequent trades will eat up your profits. Thus, several winning trades per year are just enough to fill your account with profits.
http://www.stock-market-investors.com/stock-strategies-and-systems/has-the-time-for-selling-stocks-come.html
When your stock turns into a winning player you may become frustrated about whether it is time to sell it. Many financial advisors recommend the avoidance of selling a winning stock, whereas other specialists claim that selling is an inseparable part of the trading process.
Consider the following case. You have purchased a stock that has become winning. One of the alternative courses of action that you can undertake is to sell the stock and enjoy its profits. On the other hand, you can keep the stock and wait to see its future development.
However, you should consider the following steps regarding the second option. They are required in order not to lose the profits you have acquired.
1.Examine Company's Fundamentals
The first thing you should examine is the fundamentals of the company that has issued the stock. This is required in order to see whether the company has stable fundamentals. Failure in the latter may lead to a fall in the price of your winning stock.
Make a careful examination on such things as cash flow, debt, sales and etc. If there is a problem don't wait for the market to notice these problems and quickly sell the stock before the price has fallen and you have lost your profits.
2.Set a Target Price
When you purchase a stock it is a good idea to set a target price, which if reached triggers the selling of the stock. The target price of the stock may be both above and below the current level. This means that if the stock increases or decreases to a certain level you should sell it.
The setting of an upper limit is many times required for the purpose of insuring yourself against the potential inability of the stock to sustain a market price that is above a certain level. A bad event may trigger the fall in the price and as a result you may lose your profits.
Additionally, many investors know how much they want to get from a stock and establish the upper level. Once reached, they dump the stock.
3.Watch for Events Suggesting It Is Time for Selling
Many events can have a negative effect on the value of your winning stock. Thus, you should carefully consider them and whenever they occur you should embark on selling. Such events may include:
◦Too much attention from the media
Too much attention on the part of the media may lead to artificially inflated prices of the stock since many investors show interest. After the hype passes the price may start to fall and result in the loss of profits.
◦Slowed growth of the stock.
If you possess a growth stock, it is good to consider its selling after it has reached the point at which its growth speed has started to decrease. This is required because the market shows negative attitude toward growth stocks that are unable to sustain their growth.
◦Better investment opportunities
It may turn out that there are other stocks that provide better returns. The latter may present a lower level of risk as well. Thus, it is recommended that you consider the selling of your stock and purchasing one of these.
◦Decreased or Eliminated Dividends
At one point or another, the company issuing the stock may start to decrease the dividends it pays to shareholders. If they are also completely eliminated, then this may indicate that the company is undergoing some change or problem. This represents a good reason for selling the stock and avoiding losing your profits.
Many financial experts advise the selling of part of the stock. The rest is left to grow further. In this way you get part of your profits and let the rest generate further returns.
Finally, don't be too hasty and make frequent trades just because you have obtained some profits from a stock. The commission fees that you will have to pay for the frequent trades will eat up your profits. Thus, several winning trades per year are just enough to fill your account with profits.
http://www.stock-market-investors.com/stock-strategies-and-systems/has-the-time-for-selling-stocks-come.html
Avoiding Bad Stock
Avoiding Bad Stock
Most investors often fall in the simple trap of believing someone who tells them that a particular stock represents the next winning bet. However, you should be very cautious when examining the possibility of investing in such a "promising" stock.
1. An example of a great looking stock is the one that looks absolutely healthy from the outside, but it is usually hollow and unprofitable in its core. Most investors that are attracted by these shiny stocks eventually find out that the companies that have issued them are not profitable and financially sustainable. These stocks are easily forgotten after a short period of time.
2. Another example of a bad stock is the one that is tied to the cycles of the business. This means that its price is very vulnerable to the changing cycles of the market. If you purchase the stock at a time when its price was high (due to high demand), you will soon end up with a worthless stock because of the changed cycle of the market.
3. Sometimes a stock may be really very profitable and a viable investment. However, you have entered the game too late at a point where the market has increased the price of the stock to a high level. No matter how good the stock may be if you buy high you will soon feel the losses.
Making the Right Investment Decision
In order to make a successful investment decision you should first of all select a company that has a reliable business. Additionally, the company should prove that it has good prospects for success in terms of growth.
Second, you should be able to find a price that coincides with the current state of the company and its future position. You should make a reasonable evaluation in order to avoid paying more than the company is really worth.
In order to determine the current and future value of the company's stock, you can refer to one or several of the many formulas for this purpose. However, you should not fully rely on them and try to develop your common sense feelings in order to pick the stocks that best meet your financial goals.
When you start the stock selection process take your time. Don't be too impatient and if a stock doesn't look very viable don't invest in it. There are plenty of other opportunities in which you can invest your hard-earned money. Analyze all the alternative investments and select the one that best meets your needs and goals.
Remember that you should try to avoid the described above bad stocks, which only look profitable but are financially hollow. Additionally, the best way not to lose your money is to invest reasonably and cautiously by analyzing every opportunity before jumping into it.
http://www.stock-market-investors.com/stock-market-advices-and-tips/avoiding-bad-stock.html
Most investors often fall in the simple trap of believing someone who tells them that a particular stock represents the next winning bet. However, you should be very cautious when examining the possibility of investing in such a "promising" stock.
1. An example of a great looking stock is the one that looks absolutely healthy from the outside, but it is usually hollow and unprofitable in its core. Most investors that are attracted by these shiny stocks eventually find out that the companies that have issued them are not profitable and financially sustainable. These stocks are easily forgotten after a short period of time.
2. Another example of a bad stock is the one that is tied to the cycles of the business. This means that its price is very vulnerable to the changing cycles of the market. If you purchase the stock at a time when its price was high (due to high demand), you will soon end up with a worthless stock because of the changed cycle of the market.
3. Sometimes a stock may be really very profitable and a viable investment. However, you have entered the game too late at a point where the market has increased the price of the stock to a high level. No matter how good the stock may be if you buy high you will soon feel the losses.
Making the Right Investment Decision
In order to make a successful investment decision you should first of all select a company that has a reliable business. Additionally, the company should prove that it has good prospects for success in terms of growth.
Second, you should be able to find a price that coincides with the current state of the company and its future position. You should make a reasonable evaluation in order to avoid paying more than the company is really worth.
In order to determine the current and future value of the company's stock, you can refer to one or several of the many formulas for this purpose. However, you should not fully rely on them and try to develop your common sense feelings in order to pick the stocks that best meet your financial goals.
When you start the stock selection process take your time. Don't be too impatient and if a stock doesn't look very viable don't invest in it. There are plenty of other opportunities in which you can invest your hard-earned money. Analyze all the alternative investments and select the one that best meets your needs and goals.
Remember that you should try to avoid the described above bad stocks, which only look profitable but are financially hollow. Additionally, the best way not to lose your money is to invest reasonably and cautiously by analyzing every opportunity before jumping into it.
http://www.stock-market-investors.com/stock-market-advices-and-tips/avoiding-bad-stock.html
****Bull and Bear Market Strategies - Damn Bloody Good Gems!
The stock market often falls under the conditions of the so called bull and bear markets. Intelligent investors are well familiar with the conditions of both and know exactly what to do.
Under a down market you have several options.
- One of them is to sell immediately in order to minimize your losses.
- Another option is to let the market work its way through the problem with no action from your side.
- A third option is to benefit from the stock decline and add some more to your portfolio. But, this should be done only if you don't perceive that there is something wrong with the company that has led to the stock decline.
- First of all, you can sell a part of the shares and use the money to repurchase the stock when its price falls again.
- Secondly, you can leave the market work its way through the imbalance with no action from your side.
- Thirdly, you can take advantage of the high prices and sell the stocks for a profit.
Never forget that it is important to base your decisions on knowledge not on feelings. This means that being educated about the company and the industry from which your stocks come from, the market conditions under which you operate will be of small importance to you.
http://www.stock-market-investors.com/stock-strategies-and-systems/bull-and-bear-market-strategies.html
Types of Stock Market Losses
Types of losses
Capital loss
Lost opportunity
Missed profit loss
Tips for Preventing and Dealing with Losses
•Evaluate the worthiness of a certain investment by measuring it against a US Treasury Note, which provides risk-free investment with relatively small returns. This will help you determine how much more the particular stock will bring you and whether the risk of sustaining losses is worth it.
•In order to avoid missed profit losses don't be too greedy and apply common sense when you see the price of your stock rising. Otherwise, you risk missing the high level and you will have to put up with a lower less beneficial one at best.
•Never console yourself that the losses you have sustained are just on paper and are not realized until you sell the stock. If you are convinced that the losing stocks still represent good long-term investment potentials, you should consider holding them disregarding the current lack of good performance. Otherwise, the paper losses will be turned into lost opportunity for each day you keep your stocks.
There is no person who likes losing money. However, you should accept the idea of losing some money from time to time. Additionally, whenever you notice that your stocks are losing their positions and their long-term prospects are not good, it may be better to sell them and move on to a better deal.
http://www.stock-market-investors.com/stock-investment-risk/types-of-stock-market-losses.html
Capital loss
Lost opportunity
Missed profit loss
Tips for Preventing and Dealing with Losses
•Evaluate the worthiness of a certain investment by measuring it against a US Treasury Note, which provides risk-free investment with relatively small returns. This will help you determine how much more the particular stock will bring you and whether the risk of sustaining losses is worth it.
•In order to avoid missed profit losses don't be too greedy and apply common sense when you see the price of your stock rising. Otherwise, you risk missing the high level and you will have to put up with a lower less beneficial one at best.
•Never console yourself that the losses you have sustained are just on paper and are not realized until you sell the stock. If you are convinced that the losing stocks still represent good long-term investment potentials, you should consider holding them disregarding the current lack of good performance. Otherwise, the paper losses will be turned into lost opportunity for each day you keep your stocks.
There is no person who likes losing money. However, you should accept the idea of losing some money from time to time. Additionally, whenever you notice that your stocks are losing their positions and their long-term prospects are not good, it may be better to sell them and move on to a better deal.
http://www.stock-market-investors.com/stock-investment-risk/types-of-stock-market-losses.html
Before You Buy Stocks
Before You Buy Stocks
No stock investment should be done without a thorough preliminary check on its potentials. This is required in order not to wake up in the next morning and wonder why you have put your money in this stock at all.
This is especially true when the question comes to long-term investing. It will never hurt you to make a close examination of the stocks you are about to purchase. If you don't do that your potential of losing money is highly increased.
In order to determine whether a certain company's stock is worth the investment you should consider the following criteria:
1.Company growth potential
What you should pay attention to is the growth in earnings and revenue. Additionally, the company growth should be sustained over longer periods of time.
In case the revenue lags behind with respect to earnings, you should dig deeper and try to find the reasons why this is so.
On the other hand, if the earnings are declining or keeping one and the same level while the revenue is increasing, it may mean that:
◦The company is launching a new product
◦The company is entering a new market
◦There are management inefficiencies
◦The company cannot compete efficiently in the current market
2.Company understanding
You should be well aware of the activities and purposes of the company and be possible to state them in simple words so that even a child can understand you.
You are not required to know the subtleties of the particular business, but you should educate yourself on its operations and functions. Additionally, don't direct your attention to companies with sophisticated business models. They don't guarantee you higher profits. The latter can be gained even from companies with less sophisticated business models that provide almost the same efficiency.
3.Cost of investment
Now that you have done the necessary research on the company and have gained a thorough understanding of its structure and operations, it is time to see how much the deal will cost you.
Before paying for the stock, check whether the stock is not currently at its "hot" state, which may mean paying a high price.
A good tactic may be to wait until the market suffers the negative consequences of some bad event and its prices are down. In such a way you gain the opportunity of enjoying higher profits later.
If the price of the stock is too low, but you cannot see anything wrong with the company don't hesitate and buy it.
On the other hand, you should always assume the chance that your analysis has some flaws. In such a case, it is better to abandon the research for the sake of saving your money and not risking losing them just because you have been impatient.
Final Piece of Advice
Apply as much patience as possible and observe the stock for a while. Make all the necessary checks and analysis before jumping into the deal. If the conditions have changed it may be better to abandon your research and stock and head for the next opportunity by learning from the mistakes you have committed.
http://www.stock-market-investors.com/stock-strategies-and-systems/before-you-buy-stocks.html
No stock investment should be done without a thorough preliminary check on its potentials. This is required in order not to wake up in the next morning and wonder why you have put your money in this stock at all.
This is especially true when the question comes to long-term investing. It will never hurt you to make a close examination of the stocks you are about to purchase. If you don't do that your potential of losing money is highly increased.
In order to determine whether a certain company's stock is worth the investment you should consider the following criteria:
1.Company growth potential
What you should pay attention to is the growth in earnings and revenue. Additionally, the company growth should be sustained over longer periods of time.
In case the revenue lags behind with respect to earnings, you should dig deeper and try to find the reasons why this is so.
On the other hand, if the earnings are declining or keeping one and the same level while the revenue is increasing, it may mean that:
◦The company is launching a new product
◦The company is entering a new market
◦There are management inefficiencies
◦The company cannot compete efficiently in the current market
2.Company understanding
You should be well aware of the activities and purposes of the company and be possible to state them in simple words so that even a child can understand you.
You are not required to know the subtleties of the particular business, but you should educate yourself on its operations and functions. Additionally, don't direct your attention to companies with sophisticated business models. They don't guarantee you higher profits. The latter can be gained even from companies with less sophisticated business models that provide almost the same efficiency.
3.Cost of investment
Now that you have done the necessary research on the company and have gained a thorough understanding of its structure and operations, it is time to see how much the deal will cost you.
Before paying for the stock, check whether the stock is not currently at its "hot" state, which may mean paying a high price.
A good tactic may be to wait until the market suffers the negative consequences of some bad event and its prices are down. In such a way you gain the opportunity of enjoying higher profits later.
If the price of the stock is too low, but you cannot see anything wrong with the company don't hesitate and buy it.
On the other hand, you should always assume the chance that your analysis has some flaws. In such a case, it is better to abandon the research for the sake of saving your money and not risking losing them just because you have been impatient.
Final Piece of Advice
Apply as much patience as possible and observe the stock for a while. Make all the necessary checks and analysis before jumping into the deal. If the conditions have changed it may be better to abandon your research and stock and head for the next opportunity by learning from the mistakes you have committed.
http://www.stock-market-investors.com/stock-strategies-and-systems/before-you-buy-stocks.html
When to Buy and Sell Stocks
Sound stock decisions should be made on the basis of thorough company knowledge, not just on the basis of the price of the stock. A rising price most of the times means that the time to sell the stock is nearing. On the other hand, a falling price may signal that the time to purchase stocks is coming.
http://www.stock-market-investors.com/stock-strategies-and-systems/when-to-buy-and-sell-stocks.html
http://www.stock-market-investors.com/stock-strategies-and-systems/when-to-buy-and-sell-stocks.html
Pump and Dump Scams - All too familiar in our local bourse
How to Avoid Pump and Dump Scams
Advertisement If you have experienced the flooding of your mail box with offers and recommendations for the purchase of a particular stock that promises huge returns, be very cautious because you may fall in the common scam that is referred to as "pump and dump".
How Pump and Dump Stock Scam Works
Under this scam crooks purchase large number of a company stocks that are extremely cheap. They do it in such a way that no attention is attracted to their purchase.
After this the crooks embark on a vast campaign of pumping up the price of the stocks by telling stories of how the price will raise leading to high returns. Additionally, it presents the stocks as an opportunity to become an owner of very profitable business. The crooks predict the potentially high returns happening within the next few days.
The crooks encourage their victims to purchase the stocks until the price is low and thus take advantage of the eventual high profits. If they are persuasive enough and manage to attract people to the particular stocks, the prices of the latter will start to rise. This will be used by the crooks to support their predictions and further pump up the price by attracting more people.
Such scams as false press releases and analysts commentaries may be used to further increase the price and gain credibility.
After the price reaches a particular point the crooks sell their stocks making huge profits. This is also the time when company officials have expressed their concerns about the rising prices of their stocks.
As a result of the sold by the crooks stocks, the price starts to fall, which leads to the selling by the other shareholders. Eventually, the shareholders are burned by the scam and the company receives sometimes undeserved bad reputation.
How to Avoid Pump and Dump Scams
In order to avoid falling into such a scam, consider the person, who recommends you the purchase of particular stocks. If you don't know him/her or s/he doesn't possess the required credentials you'd better not purchase the stocks. Additionally, beware when you are offered quick and huge profits. They rarely turn out to be huge if profits at all. Finally, new products, big announcements and etc. may also be a sign of the next scam that you may fall into.
http://www.stock-market-investors.com/stock-market-advices-and-tips/how-to-avoid-pump-and-dump-scams.html
Advertisement If you have experienced the flooding of your mail box with offers and recommendations for the purchase of a particular stock that promises huge returns, be very cautious because you may fall in the common scam that is referred to as "pump and dump".
How Pump and Dump Stock Scam Works
Under this scam crooks purchase large number of a company stocks that are extremely cheap. They do it in such a way that no attention is attracted to their purchase.
After this the crooks embark on a vast campaign of pumping up the price of the stocks by telling stories of how the price will raise leading to high returns. Additionally, it presents the stocks as an opportunity to become an owner of very profitable business. The crooks predict the potentially high returns happening within the next few days.
The crooks encourage their victims to purchase the stocks until the price is low and thus take advantage of the eventual high profits. If they are persuasive enough and manage to attract people to the particular stocks, the prices of the latter will start to rise. This will be used by the crooks to support their predictions and further pump up the price by attracting more people.
Such scams as false press releases and analysts commentaries may be used to further increase the price and gain credibility.
After the price reaches a particular point the crooks sell their stocks making huge profits. This is also the time when company officials have expressed their concerns about the rising prices of their stocks.
As a result of the sold by the crooks stocks, the price starts to fall, which leads to the selling by the other shareholders. Eventually, the shareholders are burned by the scam and the company receives sometimes undeserved bad reputation.
How to Avoid Pump and Dump Scams
In order to avoid falling into such a scam, consider the person, who recommends you the purchase of particular stocks. If you don't know him/her or s/he doesn't possess the required credentials you'd better not purchase the stocks. Additionally, beware when you are offered quick and huge profits. They rarely turn out to be huge if profits at all. Finally, new products, big announcements and etc. may also be a sign of the next scam that you may fall into.
http://www.stock-market-investors.com/stock-market-advices-and-tips/how-to-avoid-pump-and-dump-scams.html
The Long-Term Scope of Stocks
In order to become an educated stock investor you should always keep in mind that stocks are an investment tool that gives the best results over the long-term. Only then their positive rewards can be felt.
It is advisable to move your assets to more secure investments when you foresee that you will need some cash out of your stock investments. Some potential parking places include fixed income investments (e.g. bonds, bank CDs) or other products that are characterized by substantial stability.
A planning of three to five years ahead of the time you will need the money is recommended. Reasonable judgment is required in order to make a good prediction on when exactly you will need the money so that you can plan ahead the reallocation of assets. After you have determined that you should select the stable products to which you can transfer your assets.
http://www.stock-market-investors.com/stock-strategies-and-systems/long-term-scope-of-stocks.html
It is advisable to move your assets to more secure investments when you foresee that you will need some cash out of your stock investments. Some potential parking places include fixed income investments (e.g. bonds, bank CDs) or other products that are characterized by substantial stability.
A planning of three to five years ahead of the time you will need the money is recommended. Reasonable judgment is required in order to make a good prediction on when exactly you will need the money so that you can plan ahead the reallocation of assets. After you have determined that you should select the stable products to which you can transfer your assets.
http://www.stock-market-investors.com/stock-strategies-and-systems/long-term-scope-of-stocks.html
Stock Analyst Recommendations - Should We Trust Them?
To conclude, the fact that analysts, or their firm, may face a conflict of interest does not necessarily mean that the stock analyst recommendations are flawed or unwise. And yet, don't rely solely on them for your investment decisions. Do your own research, such as reading companies' prospectus, quarterly and annual reports that are filed with the SEC, etc.
http://www.stock-market-investors.com/pick-a-stock-guides/stock-analyst-recommendations-should-we-trust-them.html
Protecting Yourself from Analyst Conflicts of Interest
Here are some tips that will help you protect yourself from analyst conflicts of interest when researching investments.
•Always read all disclosures about the types of research recommendations that the analyst firm has made and the conflicts of interest.
•Check whether the analyst's firm has underwritten the company's stock offerings.
•Check the lock-up agreements and see if the lock-up period is about to expire or has been waived by the underwriter.
•Research the company's financial reports (you can use the SEC's EDGAR database for this purpose) and if it is hard for you to analyze them turn to a professional for help.
•Gather as much information as you can about the company you are considering by reading independent news reports, reference books, commercial databases, etc.
Finally, always have in mind that even the most unbiased and sound analyst recommendation may not be suitable for your individual financial circumstances.
http://www.stock-market-investors.com/pick-a-stock-guides/stock-analyst-recommendations-should-we-trust-them.html
Protecting Yourself from Analyst Conflicts of Interest
Here are some tips that will help you protect yourself from analyst conflicts of interest when researching investments.
•Always read all disclosures about the types of research recommendations that the analyst firm has made and the conflicts of interest.
•Check whether the analyst's firm has underwritten the company's stock offerings.
•Check the lock-up agreements and see if the lock-up period is about to expire or has been waived by the underwriter.
•Research the company's financial reports (you can use the SEC's EDGAR database for this purpose) and if it is hard for you to analyze them turn to a professional for help.
•Gather as much information as you can about the company you are considering by reading independent news reports, reference books, commercial databases, etc.
Finally, always have in mind that even the most unbiased and sound analyst recommendation may not be suitable for your individual financial circumstances.
Earnings Season Investor Importance
If you are a buy and hold investor then you should not be very concerned about the earnings season since its focus is on short-term goals. Earnings season affects the prices over the short term. So, it is important to active traders who may seize different opportunities.
http://www.stock-market-investors.com/stock-investing-basics/earnings-season-basics.html
http://www.stock-market-investors.com/stock-investing-basics/earnings-season-basics.html
Investment Opportunities in Times of Financial Crisis
Investment Opportunities in Times of Financial Crisis
It looks like the stock market is not the favorite place for anyone these days. Every day brings another disturbing news or commentary. Another stock tanked. Another bank failed. And so on.
The financial marketplace is now marked with extreme volatility and investments resemble quite a lot lottery tickets - unpredictable and surprising rallies in the value of stocks and bonds are followed by sudden significant drops. No wonder that so many investors sell up and run away from the stock market, which only worsens the situation and further pushes the stock market down.
So why should you be the one to go against the current? Is it wise to invest in stocks right now?
Actually, it is. Now that everyone else is selling it is one of the best times to invest in stocks.
"Be Greedy When Others Are Fearful"
Remember that famous Warren Buffet's quote?
"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
Right now fear has seized the stock market and to many investors it seems like it is the end of the world now. However, it is not. The economy and the market will recover even if it takes longer than expected. Thus, what you can do in times of crisis like the current one is take advantage of the attractive prices and fearful environment.
Of course, this does not mean that you should invest in companies with bad outlook. Before you make a major, long-term investment, do your homework and find companies with strong and experienced management teams, good track records of profitability and growth, and innovative R&D.
You may not find extraordinary bargains but there are certainly some nice bargains for patient investors committed to gains over the long term. There are many companies that the general market has dragged down to very low prices despite their great product lines.
Invest Based on Your Objectives and Age
Do not forget that both your age and objectives should play role when you are choosing your investments.
If you are young, far from your retirement years, you can afford a little bit bigger risk. Surely, it is painful to watch your investments drop significantly. And it is very easy to give in to the fear when a stock in your portfolio drops 50%. But fear is not a good guide to decision making. While sudden financial losses may be indeed indicators that even worse drops in value lie ahead, they can just as easily be followed by an upswing.
Selling now and moving to safer investments (such as US treasuries) that will provide only 2 or 3% rate of return will not get you to your goals and will certainly take you too much time to even get back to where you were before the market went down.
On the other hand, if you are near your retirement you should choose more stable and safer investments. First, you might never be able to recover from a significant drop since you have much shorter timeframe to work with. Second, since you are going to need your money sooner, you may be forced to sell your assets at their lows.
Conclusion:
Surely the current financial/credit/housing crisis caused tremendous losses and sent many investors "racing" for the exits. Yet, remember, when the real estate and the stock market are going down, this is still equal to both crisis and opportunity.
http://www.stock-market-investors.com/stock-market-advices-and-tips/investment-opportunities-in-times-of-financial-crisis.html
It looks like the stock market is not the favorite place for anyone these days. Every day brings another disturbing news or commentary. Another stock tanked. Another bank failed. And so on.
The financial marketplace is now marked with extreme volatility and investments resemble quite a lot lottery tickets - unpredictable and surprising rallies in the value of stocks and bonds are followed by sudden significant drops. No wonder that so many investors sell up and run away from the stock market, which only worsens the situation and further pushes the stock market down.
So why should you be the one to go against the current? Is it wise to invest in stocks right now?
Actually, it is. Now that everyone else is selling it is one of the best times to invest in stocks.
"Be Greedy When Others Are Fearful"
Remember that famous Warren Buffet's quote?
"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
Right now fear has seized the stock market and to many investors it seems like it is the end of the world now. However, it is not. The economy and the market will recover even if it takes longer than expected. Thus, what you can do in times of crisis like the current one is take advantage of the attractive prices and fearful environment.
Of course, this does not mean that you should invest in companies with bad outlook. Before you make a major, long-term investment, do your homework and find companies with strong and experienced management teams, good track records of profitability and growth, and innovative R&D.
You may not find extraordinary bargains but there are certainly some nice bargains for patient investors committed to gains over the long term. There are many companies that the general market has dragged down to very low prices despite their great product lines.
Invest Based on Your Objectives and Age
Do not forget that both your age and objectives should play role when you are choosing your investments.
If you are young, far from your retirement years, you can afford a little bit bigger risk. Surely, it is painful to watch your investments drop significantly. And it is very easy to give in to the fear when a stock in your portfolio drops 50%. But fear is not a good guide to decision making. While sudden financial losses may be indeed indicators that even worse drops in value lie ahead, they can just as easily be followed by an upswing.
Selling now and moving to safer investments (such as US treasuries) that will provide only 2 or 3% rate of return will not get you to your goals and will certainly take you too much time to even get back to where you were before the market went down.
On the other hand, if you are near your retirement you should choose more stable and safer investments. First, you might never be able to recover from a significant drop since you have much shorter timeframe to work with. Second, since you are going to need your money sooner, you may be forced to sell your assets at their lows.
Conclusion:
Surely the current financial/credit/housing crisis caused tremendous losses and sent many investors "racing" for the exits. Yet, remember, when the real estate and the stock market are going down, this is still equal to both crisis and opportunity.
http://www.stock-market-investors.com/stock-market-advices-and-tips/investment-opportunities-in-times-of-financial-crisis.html
Introduction to Stocks
The price of the stock is set following certain rules. Generally, stocks are traded on the stock market, which tends to determine the value of the company on daily basis.
- A positive attitude is awarded to companies that report quick growth in their earnings as well as earnings growth that is stable.
- Many investors target companies that don't experience positive earnings, but are predicted to shift their losing position into a winning one in the near future.
- What is not looked at with a good eye is if the company sustains losses for which no good reasons are provided.
- Additionally, the market will not accept companies that have a declining earnings trade.
http://www.stock-market-investors.com/stock-investing-basics/introduction-to-stocks.html
****Price to Earnings Growth Ratio (PEG) Explanation
Price to Earnings Growth Ratio (PEG) Explanation
High growth rates are one of the factors that greatly attract investors to a particular stock. As a result of the increased attention, the price of the stock may hit the skies. However, this doesn't indicate an overvaluation of the stock, because if a company is experiencing higher than the average growth it deserves the attention and the subsequent higher prices.
A ratio that manages to explain this attention is the price/earnings growth ratio (PEG). In order to calculate it you should divide the P/E by the projected earnings growth rate. If the value of the PEG is above 1, you should approach this stock with caution, because this higher value may indicate a company that trades above its growth rate allows. The value you should look for is 1 or below it.
When you compare the P/Es of different companies you may notice that the P/E of one is greater than the other. One company may appear far more expensive than the other operating in the same industry. However, if you make a closer examination and see that the one company is expected to grow more than the other, you will definitely have to choose the first.
So, when you make your analysis of a stock, you look for a forward P/E in the PEG. However, a low PEG should be searched for if a trailing P/E is applied. You should also look for a PEG that has an amount of 1 or less.
However, you should keep in mind that there are differences in the industries in which companies operate. You should not forget that a comparison between companies of the same industry should be done.
Another word of caution concerns large cap companies for which PEG is applied with a lower success. This is caused by the fact that such companies due to their size grow much slowly.
PEG has its disadvantages. One of them is its heavy reliance on earnings estimates. This is considered drawback since estimates are characterized with uncertainty until the actual numbers are reported. Since projections may not be the same as the actual numbers at the end of the year, the PEG may have totally wrong results.
Thus, you should include a margin for error. 15% is a good margin you can consider.
http://www.stock-market-investors.com/stock-investing-basics/price-to-earnings-growth-ratio-peg-explanation.html
High growth rates are one of the factors that greatly attract investors to a particular stock. As a result of the increased attention, the price of the stock may hit the skies. However, this doesn't indicate an overvaluation of the stock, because if a company is experiencing higher than the average growth it deserves the attention and the subsequent higher prices.
A ratio that manages to explain this attention is the price/earnings growth ratio (PEG). In order to calculate it you should divide the P/E by the projected earnings growth rate. If the value of the PEG is above 1, you should approach this stock with caution, because this higher value may indicate a company that trades above its growth rate allows. The value you should look for is 1 or below it.
When you compare the P/Es of different companies you may notice that the P/E of one is greater than the other. One company may appear far more expensive than the other operating in the same industry. However, if you make a closer examination and see that the one company is expected to grow more than the other, you will definitely have to choose the first.
So, when you make your analysis of a stock, you look for a forward P/E in the PEG. However, a low PEG should be searched for if a trailing P/E is applied. You should also look for a PEG that has an amount of 1 or less.
However, you should keep in mind that there are differences in the industries in which companies operate. You should not forget that a comparison between companies of the same industry should be done.
Another word of caution concerns large cap companies for which PEG is applied with a lower success. This is caused by the fact that such companies due to their size grow much slowly.
PEG has its disadvantages. One of them is its heavy reliance on earnings estimates. This is considered drawback since estimates are characterized with uncertainty until the actual numbers are reported. Since projections may not be the same as the actual numbers at the end of the year, the PEG may have totally wrong results.
Thus, you should include a margin for error. 15% is a good margin you can consider.
http://www.stock-market-investors.com/stock-investing-basics/price-to-earnings-growth-ratio-peg-explanation.html
Stock Price Volatility
Stock Price Volatility
Stock prices are characterized by volatility. When significant changes occur, investors tend to panic.
Different factors influence the movement in stock prices. For example, when the events in Asia of 1998 occurred, the prices of stocks got really dynamic, which was reflected in a negative way even on investors that held high expertise. During the following months the S&P 500 experienced one of its highest drops of 20% observed in recent times. This fall was later followed by a huge increase of 30%, which in itself represented a record climb.
The media concentrated its attention to the Dow and spoke of stocks as if they were deprived of any volatility. What happened actually was that different companies experienced the events in different ways since they were affected in varying degrees.
Going back to the 1998 crisis, investors generally bought stocks of companies that have proven their consistency and were part of the Dow. They preferred them because they represented a higher degree of stability. On the other hand, negatively influenced were companies of a smaller size.
During these times, the technology industry enjoyed positive attitude since the Internet has gained more popularity. However, oil-equipment companies sustained losses since they were greatly affected by the Asian crisis.
So, having in mind these factors, the prices of stocks are very volatile. They tend to be influenced by the news going around. Investors try to determine the influence of different news on the price of stocks. Additionally, the stock market is susceptible to the influence of different events both of economic and political character.
http://www.stock-market-investors.com/stock-investing-basics/stock-price-volatility.html
Stock prices are characterized by volatility. When significant changes occur, investors tend to panic.
Different factors influence the movement in stock prices. For example, when the events in Asia of 1998 occurred, the prices of stocks got really dynamic, which was reflected in a negative way even on investors that held high expertise. During the following months the S&P 500 experienced one of its highest drops of 20% observed in recent times. This fall was later followed by a huge increase of 30%, which in itself represented a record climb.
The media concentrated its attention to the Dow and spoke of stocks as if they were deprived of any volatility. What happened actually was that different companies experienced the events in different ways since they were affected in varying degrees.
Going back to the 1998 crisis, investors generally bought stocks of companies that have proven their consistency and were part of the Dow. They preferred them because they represented a higher degree of stability. On the other hand, negatively influenced were companies of a smaller size.
During these times, the technology industry enjoyed positive attitude since the Internet has gained more popularity. However, oil-equipment companies sustained losses since they were greatly affected by the Asian crisis.
So, having in mind these factors, the prices of stocks are very volatile. They tend to be influenced by the news going around. Investors try to determine the influence of different news on the price of stocks. Additionally, the stock market is susceptible to the influence of different events both of economic and political character.
http://www.stock-market-investors.com/stock-investing-basics/stock-price-volatility.html
****Common Stock Investing Strategies
Common Stock Investing Strategies
This article aims to familiarize you with several investing strategies for common stocks. You can choose for yourself the ones that best meet your needs and financial goals.
Investing Strategy 1 - Buy and Hold
If you choose this investing strategy you will have to purchase a stock and be ready to hold it over a long period of time, since buy and hold strategy is based on the assumption that the price of the stock will rise with time. However, due to the dynamics of the market you can never be sure that this will happen. This investing strategy elaborates on the idea that the market will continue to expand due to its capitalist nature. As a result it assumes that the stock prices will continue to rise and shareholders will enjoy higher dividends.
The market fluctuations and inflation levels are smoothed over the long-term. The advantage of this investing strategy is that you pay less commission fees and taxes since you trade less. You hold the stocks for a long time and don't trade on frequent basis.
Investing Strategy 2 - Growth Investing Strategy
This strategy aims to identify the growth potential of a company. Companies with high earnings growth are very attractive to investors who believe that such companies will experience continuing rise in their stock price since more and more investors will want to take advantage of the regular and large dividend paying.
One of the most important factors for consideration in growth investing is the earnings per share of the company. Investors observe the changes in the earnings per share over the years not neglecting the revenue growth as well.
What is more, in order to get a clear view on the willingness of the market to pay for a given earnings growth, investors examine the relationship between the price/earnings ratio and the annual earnings growth.
Keep in mind that this strategy carries a certain degree of risk, since the target companies are usually young. However, as you know risk and reward go hand in hand, meaning the higher the risk the higher the potential reward from the investment.
Investing Strategy 3 - Value Investing Strategy
Value investors are often referred to as bargain seekers. This means that they search for stocks that are sold at a price that is below the real value of the company.
No matter what the current price of the stock is, be it $20 or $100, it should be below the real value of the company. Value stocks are those that have been overlooked by the market and as a result their price is lower. The latter may be caused by the chasing of the market after stocks that are currently considered to be more attractive.
Generally, growth and value investing are considered to be positioned in opposite sides of the investment spectrum.
Investing Strategy 4 - Timing the Market
The major idea behind market timing is the buying low and selling high. Market timers believe that they can successfully predict the behavior of the market regarding the price movement of stocks. This makes timing the market the opposite of the buy and hold strategy.
If you are to time the market, you should familiarize yourself with such tools as technical and fundamental analysis as well as even intuition.
Most financial experts are against timing the market because it is difficult to identify whether a particular stock price has reached its peak or bottom. It may eventually go even higher or lower.
Additionally, with the often trades that are executed under this strategy commission fees will greatly reduce your profits especially of you make frequent trades of small amounts.
Another disadvantage of timing the market is that in theory over the long-term the market goes up. Therefore, it is better to stay fully invested during the time in order not to miss the long-term stock rewards.
Investing Strategy 5 - GARP Investing Strategy
Growth at Reasonable Price (GARP) represents a combination between the value and growth investing strategies. Therefore, applying this strategy will involve the search of a stock that is both undervalued and has a potential for future growth. You may find it difficult to find such a stock due to the opposing characteristics of growth and value investing. However, it is not unattainable. Investors applying this strategy use the PEG (price-to-earnings-growth) ratio as an indicator for a stock that possesses a growth potential at a price that is below the real value of the company.
http://www.stock-market-investors.com/stock-strategies-and-systems/common-stock-investing-strategies.html
This article aims to familiarize you with several investing strategies for common stocks. You can choose for yourself the ones that best meet your needs and financial goals.
Investing Strategy 1 - Buy and Hold
If you choose this investing strategy you will have to purchase a stock and be ready to hold it over a long period of time, since buy and hold strategy is based on the assumption that the price of the stock will rise with time. However, due to the dynamics of the market you can never be sure that this will happen. This investing strategy elaborates on the idea that the market will continue to expand due to its capitalist nature. As a result it assumes that the stock prices will continue to rise and shareholders will enjoy higher dividends.
The market fluctuations and inflation levels are smoothed over the long-term. The advantage of this investing strategy is that you pay less commission fees and taxes since you trade less. You hold the stocks for a long time and don't trade on frequent basis.
Investing Strategy 2 - Growth Investing Strategy
This strategy aims to identify the growth potential of a company. Companies with high earnings growth are very attractive to investors who believe that such companies will experience continuing rise in their stock price since more and more investors will want to take advantage of the regular and large dividend paying.
One of the most important factors for consideration in growth investing is the earnings per share of the company. Investors observe the changes in the earnings per share over the years not neglecting the revenue growth as well.
What is more, in order to get a clear view on the willingness of the market to pay for a given earnings growth, investors examine the relationship between the price/earnings ratio and the annual earnings growth.
Keep in mind that this strategy carries a certain degree of risk, since the target companies are usually young. However, as you know risk and reward go hand in hand, meaning the higher the risk the higher the potential reward from the investment.
Investing Strategy 3 - Value Investing Strategy
Value investors are often referred to as bargain seekers. This means that they search for stocks that are sold at a price that is below the real value of the company.
No matter what the current price of the stock is, be it $20 or $100, it should be below the real value of the company. Value stocks are those that have been overlooked by the market and as a result their price is lower. The latter may be caused by the chasing of the market after stocks that are currently considered to be more attractive.
Generally, growth and value investing are considered to be positioned in opposite sides of the investment spectrum.
Investing Strategy 4 - Timing the Market
The major idea behind market timing is the buying low and selling high. Market timers believe that they can successfully predict the behavior of the market regarding the price movement of stocks. This makes timing the market the opposite of the buy and hold strategy.
If you are to time the market, you should familiarize yourself with such tools as technical and fundamental analysis as well as even intuition.
Most financial experts are against timing the market because it is difficult to identify whether a particular stock price has reached its peak or bottom. It may eventually go even higher or lower.
Additionally, with the often trades that are executed under this strategy commission fees will greatly reduce your profits especially of you make frequent trades of small amounts.
Another disadvantage of timing the market is that in theory over the long-term the market goes up. Therefore, it is better to stay fully invested during the time in order not to miss the long-term stock rewards.
Investing Strategy 5 - GARP Investing Strategy
Growth at Reasonable Price (GARP) represents a combination between the value and growth investing strategies. Therefore, applying this strategy will involve the search of a stock that is both undervalued and has a potential for future growth. You may find it difficult to find such a stock due to the opposing characteristics of growth and value investing. However, it is not unattainable. Investors applying this strategy use the PEG (price-to-earnings-growth) ratio as an indicator for a stock that possesses a growth potential at a price that is below the real value of the company.
http://www.stock-market-investors.com/stock-strategies-and-systems/common-stock-investing-strategies.html
Saturday 14 November 2009
A New World Of Hospital Finance
Bond-Market Skepticism And Stock-Market Exuberance In The Hospital Industry
http://content.healthaffairs.org/cgi/content/full/21/1/104
http://content.healthaffairs.org/cgi/content/full/21/1/104
Wilmar Delays $3.5 Bln China IPO, to Invest in Africa
Food Industry News
Wilmar Delays $3.5 Bln China IPO, to Invest in Africa
Source: Reuters
12/11/2009
Singapore, Nov 12 - Wilmar International, the world's largest listed palm oil firm, signalled a promising outlook for its earnings but said the $3.5 billion listing of its China unit is on hold due to its concern over valuations.
The palmoil giant's listing plan was the recent trigger for a rally in its shares, which retreated on Thursday despite a quarterly profit that beat expectations.
"We will shelve it for the time being and wait for market conditions to improve," Wilmar's Chairman and CEO Kuok Khoon Hong told Reuters after a media and analysts' briefing for its third quarter results.
"We only will list the China operation if it commands better price than what Wilmar is commanding right now in the stock market," he added.
Analysts have estimated that Wilmar's China unit could be valued as by much as 20 times earnings, matching the parent company's current price-to-earnings multiple.
With more than 30 firms eyeing listings in either Hong Kong or India over the next few months, leading to more than $10 billion in share sales, companies wanting to list have had to keep their hopes for high prices in check..
Analysts have said Wilmar, which has a market value of $30 billion, has no immediate need for funds.
The company said it was optimistic about prospects for the rest of this year after a one-off gain helped it post a better-than-expected 35 percent rise in its third quarter profit.
Analysts were less impressed.
"Excluding exceptional and one-off items, Wilmar's operating performance in 3Q09 was not as strong as we would expect from normal seasonality," Goldman Sachs analyst Patrick Tiah said in a research note.
"Notwithstanding, given the market's low expectations we believe consensus earnings could rise following the results," he added.
Wilmar's Kuok said the company plans to invest at least $1 billion in China, Indonesia and Africa to expand its plantations and plants.
The company has raised profits in the last few quarters thanks to its processing and refining capabilities, outperforming rival palm oil firms that depend primarily on plantations.
LISTING
Wilmar's shares have more than doubled this year, but some analysts cut their ratings after the company delayed plans in late September to float its China unit due to volatile markets. The listing would have raised around $3.5 billion.
CEO Kuok said earlier in a statement that he was optimistic about the firm's prospects for the rest of the financial year given the diversity of its business segments.
Wilmar, derives about half of its total sales from China, and owns oil palm plantations and runs crushing and refining plants in Indonesia and Malaysia.
The company, the second-largest on the Singapore Exchange after Singapore Telecommunications, earned $653 million in July-September, up from $483 million a year ago.
Wilmar's earnings were higher than the average forecast of $500 million provided by three analysts surveyed by Reuters.
Wilmar's shares have jumped 136 percent so far this year, outperforming the broader index which rose around 54 percent.
On Thursday its share price traded 1.06 percent lower while the broader market was down by 0.4 percent.
http://www.flex-news-food.com/pages/26906/Palm-Oil/Singapore/wilmar-delays-$35-bln-china-ipo-invest-africa.html
Wilmar Delays $3.5 Bln China IPO, to Invest in Africa
Source: Reuters
12/11/2009
Singapore, Nov 12 - Wilmar International, the world's largest listed palm oil firm, signalled a promising outlook for its earnings but said the $3.5 billion listing of its China unit is on hold due to its concern over valuations.
The palmoil giant's listing plan was the recent trigger for a rally in its shares, which retreated on Thursday despite a quarterly profit that beat expectations.
"We will shelve it for the time being and wait for market conditions to improve," Wilmar's Chairman and CEO Kuok Khoon Hong told Reuters after a media and analysts' briefing for its third quarter results.
"We only will list the China operation if it commands better price than what Wilmar is commanding right now in the stock market," he added.
Analysts have estimated that Wilmar's China unit could be valued as by much as 20 times earnings, matching the parent company's current price-to-earnings multiple.
With more than 30 firms eyeing listings in either Hong Kong or India over the next few months, leading to more than $10 billion in share sales, companies wanting to list have had to keep their hopes for high prices in check..
Analysts have said Wilmar, which has a market value of $30 billion, has no immediate need for funds.
The company said it was optimistic about prospects for the rest of this year after a one-off gain helped it post a better-than-expected 35 percent rise in its third quarter profit.
Analysts were less impressed.
"Excluding exceptional and one-off items, Wilmar's operating performance in 3Q09 was not as strong as we would expect from normal seasonality," Goldman Sachs analyst Patrick Tiah said in a research note.
"Notwithstanding, given the market's low expectations we believe consensus earnings could rise following the results," he added.
Wilmar's Kuok said the company plans to invest at least $1 billion in China, Indonesia and Africa to expand its plantations and plants.
The company has raised profits in the last few quarters thanks to its processing and refining capabilities, outperforming rival palm oil firms that depend primarily on plantations.
LISTING
Wilmar's shares have more than doubled this year, but some analysts cut their ratings after the company delayed plans in late September to float its China unit due to volatile markets. The listing would have raised around $3.5 billion.
CEO Kuok said earlier in a statement that he was optimistic about the firm's prospects for the rest of the financial year given the diversity of its business segments.
Wilmar, derives about half of its total sales from China, and owns oil palm plantations and runs crushing and refining plants in Indonesia and Malaysia.
The company, the second-largest on the Singapore Exchange after Singapore Telecommunications, earned $653 million in July-September, up from $483 million a year ago.
Wilmar's earnings were higher than the average forecast of $500 million provided by three analysts surveyed by Reuters.
Wilmar's shares have jumped 136 percent so far this year, outperforming the broader index which rose around 54 percent.
On Thursday its share price traded 1.06 percent lower while the broader market was down by 0.4 percent.
http://www.flex-news-food.com/pages/26906/Palm-Oil/Singapore/wilmar-delays-$35-bln-china-ipo-invest-africa.html
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